Category: Legal Articles

Highlights of the New Labor Law (The Decree-Law No. 33 of 2021)


What is the Federal Decree-Law No 33 of 2021?

the Federal Decree-Law No 33 of 2021 is the new decree-law issued by the UAE President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, to regulate labor relations in the private sector. The new law will repeal UAE Federal Law No. 8 of 1980 and will come into effect on February 2, 2022.


Major changes

Since the law’s establishment, this new decree is considered the most significant amendment, as it introduces major changes in the workplace and in the employer-employee relationship. These changes include:

New Work models

A key change is the introduction of new forms of work under the article (7), including part-time, temporary, and flexible work.

In part-time work, an employee is allowed to work for one or more employers for a specific number of working hours or days.

In temporary work, a worker is engaged only for a specific period of time, or is involved in a specific task that the work ends with its completion.

Flexible work involves changing working hours or working days, depending on the workload and the employer’s needs. This means that if an employee works 40 hours a week as per the contract, he/she can perform the 40 hours in three days.

This is in addition to any other models specified by the Executive Regulations of this Decree-Law, such as freelancing, condensed working weeks, shared job models, and self-employment, according to the Ministry of Human Resources and Emiratization.


Fixed-term contract

Another key change is that the new law now defines only one type of employment contracts, namely limited or fixed-term. Article (8) states that employment contracts may not exceed three years and are renewable for a similar or lesser period upon the agreement of both parties.

However, any contracts that were concluded for indefinite term must be changed to renewable fixed-term contract.

Protection and support

The new law gives prominence to the wellbeing of employees in the workplace. Article (4) prohibits discrimination on the basis of race, color, gender, religion, nationality, social origin, or disability, emphasizing on the protection of workers against sexual harassment, bullying, or any verbal, physical or psychological violence by superiors or colleagues.

Moreover, the law underlines that all provisions regulating the employment of employees shall apply without discrimination to working women, stressing on granting women the same wages as men when performing the same task or other duties of equal value.



In addition to amendments to the maternity leave, the law, under article (32), introduces new paid leaves, such as mourning leave, paternity leave, and study leave.

Paid mourning leave is given to an employee who loses a family member one to death. The period of this leave ranges between three to five days, depending on the employee’s relation to the deceased.

When an employee has a new-born child, he is granted a paid parental leave for five working days, effective from the baby’s date of birth to six months.

Following two years of work with an employer, employees are entitled to a study leave for 10 working days per year in order to sit examinations, provided that they are enrolled in an accredited institution within the UAE.

As for the maternity leave, article (30) now allows it to extend to 60 days: 45 days with full wage, followed by 15 days on half wage. New mothers are eligible to receive additional 45 days without pay once they finish their initial maternity leave period in case of any post-partum complications or ailment in the new born. What is new, remarkably, is that new mothers of infants with special needs are entitled to a 30-day paid leave after the completion of their initial maternity leave period, renewable for another 30 days with no pay.


Other changes

Besides all what is mentioned above, the new law also introduces other changes that can be of interest to employees.

Probation Period

Article (90 states that, during the probation period – which should not be more than six months – a two-week notice must be given if an employee is terminated. Employees, on the other hand, must give a one month’s notice if they want to change jobs and a 14-day notice if they want to leave the country.

Judicial Fees Exemption

Under article (55), employees will no longer pay legal fees when filing labor cases against employers for compensation less than AED 100,000.


Non-Compete Clause

Under article (10), which states that employer is allowed to stop an employee from competing against them or to participate in a competing project in the same sector, the contract must under the new law specify a duration the clause is in effect, as it cannot last more than two years from when the employee stops working. It must also specify places and types of work that are not permitted within this time in order to protect business interests.


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UAE Commercial Transactions Law: Latest Amendments Concerning Bounced Cheques

With Federal Decree Law no. 14 of 2020 coming into effect, fundamental amendments are made to the Commercial Transactions Law promulgated by Federal Law no. 18 of 1993.

The new decree law covers matters relating to commercial cheques rules, amending 7 articles of the Commercial Transactions Law and adding 9 new articles, while repealing 3 articles of the Penal Code that used to criminalize cases of issuing cheques with bad faith, namely; Articles 401, 402, and 403.

In the following article, we will shed light on the most important of these amendments and expand on their effect on commercial transactions and the use of cheque as the preferred instrument of payments for individuals and commercial entities alike.

Limited Criminal Liability

Repealing Articles 401, 402, and 403 of the Penal Code, the new amendments have narrowed the scope of criminal liability of writing bad cheques. This means that some cases of bounced cheques are no longer prosecutable, notably the case of bounced cheques for insufficient funds, stipulated in the now-repealed Article No. (401) of the Penal Code.

Article (401)

“Detention or a fine shall be imposed upon anyone who, in bad faith, gives a draft (cheque) without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance, making the balance insufficient for settlement of the cheque, or if he orders a drawee not to cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.”

Alternative provisions introduced by the new amendments are discussed later in this article.

The Bounced Cheque as a Writ of Execution  

Before the amendments entering into effect, the beneficiary of a bounced cheque had to go through lengthy procedures, either by filing a commercial case or requesting a payment order, meaning that they had to deal with the subsequent time-consuming proceedings at the three degrees of litigation before being able to recover their dues.

As of now, the bearer of a bounced cheque for insufficient funds can use the cheque itself as a civil writ of execution in accordance with the executive regulations of the Federal Civil Procedures Code No. 11 of 1992. In other words, the beneficiary can initiate the enforcement proceedings directly before the execution judge without the need to file a claim.

According to Article (635) Bis added in the new decree-law:

“A cheque, which bears the drawee’s stamp as non-paid for unavailable or insufficient fund, shall constitute an executive instrument as per the Executive Regulation of the Federal Law No. (11) of 1992 and its bearer shall have the right to demand the coercive enforcement, wholly or partially.”

Partial Payment of Bounced Cheques

In reference to Article No. 635 bis mentioned above, and pursuant to the wording of Article 617, the beneficiary of the cheque has the right to ask the bank for partial payment of the cheque’s value if the available fund is less than the amount of the cheque, and the drawee must partially fulfill the amount in its possession unless the bearer requests otherwise. The drawee shall also, upon each partial payment, initial the back of the cheque confirming the partial payment and give back the original cheque to the bearer along with a certificate to that effect. Such certificate shall validate the right of the bearer to demand the payment of the remaining amount against the original of the initialed cheque as per Article (635) Bis or to submit a protest after the expiry of time limits provided for in Article (632).

Furthermore, to guarantee the partial payment of the beneficiary’s due, the new amendments prescribed under clause (D) of Article (641) a fine of “no less than 10% of the cheque value, subject to the minimum of AED 5,000, and no more than twice the cheque value against the bank which refuses to render partial payment of a cheque, issue a relevant certificate, or give back the original of the cheque as per the provisions stipulated in (2) of Article (617) of this Law.”


While narrowing the scope of liability of writing cheques in bad faith, the new amendments further specify the cases that bear criminal liability, by amending new articles referring to exclusive acts that, if committed by the drawer, will be considered a crime of writing cheques in bad faith. In addition, new penalties are prescribed for specific cases, some of which are introduced for the first time.

New articles

Article no. 641 bis (1) stipulates a penalty of no less than 10% of the cheque value, subject to the minimum of AED 1,000 and no more than the cheque value, for endorsing or delivering a bearer cheque while knowing that there is no sufficient funds to pay such cheque or that such cheque may not be drawn.

A jail term between 6 months and 2 years and/or a penalty of no less than 10% of the cheques value (minimum of AED 5,000) and no more than double the cheque value is stipulated under Article 641 bis (2) for whoever commits any of the following acts: 

  1. “Ordering or asking the drawee, prior to due date, not to pay the value of a cheque he has issued, with the exception of the cases provided for in Articles (620) and (625) of this Law.
  2. Closing the account or withdrawing all available fund therein before issuing the cheque or before presenting the cheque for payment or if the account has been frozen.
  3. Deliberately writing or signing the cheque in a way that make it unpayable.”

A harsher punishment of jail term for no less than one year in addition to a penalty of no less than AED 20,000 and no more than AED 100,000 is prescribed under Article 641 bis (3) for whoever commits any of the following acts: 

  1. “Forgery or counterfeiting of a cheque or attributing it to a third party by changing details through addition, deletion or other means as provided for in Article (216) of the said Federal Law No. (3) of 1987 with the objective of damaging a third party and with objective of using it for the aim of its forgery.
  2. Knowingly using a forged or counterfeit cheque.
  3. Knowingly accepting funds paid through a forged or counterfeit cheque.
  4. Using a true cheque issued in the name of others, inappropriately benefiting from it, or using it in relation to a crime of fraud.
  5. Knowingly, importing, manufacturing, holding, selling, offering or providing any tools, equipment, software, information or date used in a crime of forgery as provided for in this Article.”

On top of all that, “a punishment of life imprisonment in addition to a penalty of no less than AED 500,000 and no more than AED 1,000,000, shall apply for any crime provided for in Article (641) Bis (3) of this Decree Law committed for the objective of terrorism,” according to Article no. 641 bis (4).

A Disincentive

To say nothing of the penalties of imprisonment and fines in the new amendments, Article No. 642 will represent a deterrent against anyone who violates the law; as it states that if the court issues a conviction for one of the crimes provided for in Articles 641 bis (1) to 641 bis (3), it “may order the publication of judgment synopsis at the expense of convicted defendant in two widely circulated daily newspapers in the UAE, one in Arabic and one in English, or in two e-publishing media to be determined through the decision of the Ministry of Justice, one in Arabic and one in English.” Such synopsis shall include the convicted defendant’s name, address, profession, and ordered penalty; publication shall be compulsory in case of repetition.

Withdrawal of Existing Cheque Book

Whereas Article no. 643 stipulated the penalty of the withdrawal of existing cheque book from the convicted defendant, the amended article stipulates further consequences for cases of refusal of the convicted defendant to surrender their cheque book.

“Convicted defendant who does not surrender their existing cheque books to respective banks within fifteen (15) days from notifying them to do so shall be sentenced to a penalty of no less than AED 50,000 and no more than AED 100,000.”

The same article also introduced a new penalty for banks that violate the order provided for in the article:

“Any bank which violates the order provided for in the above two paragraphs of this Article shall be sentenced to a penalty of no less than AED 100,000 and no more than AED 200,000.

Seizure of Items

According to Article (643) Bis (1), when a defendant is convicted for any of the crimes provided for in Article (641) Bis (3) of this Law, “the court shall order the confiscation of items used in such crimes.

Still further, where using, holding, owning, selling or offering for sale such items constitute a crime, the article explicates that the court shall order the confiscation of the said items even when they are not the property of the defendant.

Prohibition of Conducting Professional or Commercial Business

Article 643 bis (2) states that “where the Court convict a defendant for any of the crimes provided for in Articles (641) to (641) Bis (4) of this Decree by Law, it may prohibit the convicted defendant from conducting any professional or commercial business for up to three (3) years if the crime committed in relation to or due to conducting the business.

However, whoever repeat committing the same crime after having been prohibited shall be subject to imprisonment for no less than one year and a penalty of no less than AED 50,000 and no more than AED 100,000 or any of them, according to the said article.

Cheque Crimes Committed by a Legal Person

Under the old law, committing a cheque crime by a corporate entity entailed criminal liability to the natural person authorized to sign the cheques whether he/she was aware of the crime or not. From now onwards, the criminal liability of signing cheques in bad faith by an authorized natural person is removed under Article 644 bis (1), provided that he or she is proven to have had no knowledge of the crime or that such person has not committed the crime for his or her own benefits or those of another.

As a way of alternative, the article states that “where the liability of the natural person is not evident, the legal person shall be subject to a penalty of no less than twice the legally applicable penalty for this crime and no more than five times of it.”

Furthermore, the article also allows for “the suspension of the legal person’s business for no more than six months, and in case of repetition, cancelation of trade license or dissolution of the legal person.”


The changes introduced by the new amendments are of great significance in various respects; the most remarkable of which is enhancing the strength of the cheque as the preferred instrument of payment, through introducing effective alternatives that ensure speed and simplification of cheque collection procedures, while bringing in new penalties that are commensurate with the respective cheque crimes.

In any case, the UAE Central Bank had given a period of more than one year from the date of publication in September 2020 for banks and companies as well as law enforcement bodies to prepare for the amendments and settle protective measures against dishonored cheques.

It is worth noting that the new amendments have entered into force on January 2nd 2022.

For more information about the new amendments to the Commercial Transactions Law, do not hesitate to contact us on the numbers shown below or visit our office......

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Gratuity Calculation Under the New UAE Labour Law

With the new Labour law coming into effect on February 2 2022, gratuity calculation is going to be different for employees under unlimited term contracts, as all employment contracts are to be changed from unlimited to limited. An employee under an unlimited contract and His/Her contract is not changed to a limited-term contract, the old […]

With the new Labour law coming into effect on February 2 2022, gratuity calculation is going to be different for employees under unlimited term contracts, as all employment contracts are to be changed from unlimited to limited.

An employee under an unlimited contract and His/Her contract is not changed to a limited-term contract, the old gratuity calculation scheme mentioned in the old Labour Law No. 8 of 1980 shall apply until your contract is renewed accordingly.

If the contract is changed to a limited-term contract, the provisions of the new Labour law no. 33 of 2021 shall apply to the new contract.

Article 51 of the new Labour law stipulates that an employee who has completed one year or more of continuous service is entitled to end of service gratuity of 21 calendar days’ basic pay for each year of the first five years of service; and 30 calendar days’ basic pay for each subsequent year of service, provided that the entire total remuneration does not exceed two years pay.

Article 137 of the old Labour law says that those who choose to resign before the end of the contract will be entitled to a 2/3 reduction of gratuity if the period of their service is between one to three years; 1/3 reduction if the period of service is between three to five years; and no reduction if the period of service exceeds five years.

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Types of Courts in UAE

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To achieve the full extent of justice, the UAE adopts three levels of courts for litigation purposes. This system enables effected party to challenge the case and present more evidence within the provisions of the law.

Types of courts in UAE:

        • Court of First Instance (federal and local)
        • Court of Appeal (federal and local)
        • Federal Supreme Court (at the federal level) and the Court of Cassation at the local level of the emirates which have independent judicial departments.

Court of First Instance

Court of First Instance is the first degree of litigation and Its jurisdiction includes examining statement of claims, authentication of documents, all urgent matters related to disputes among the people and safeguarding their rights.

Court of Appeal

Court of Appeal is the second degree of litigation which entitles the litigant affected by the Court of First Instance to appeal his/her case before a higher court in accordance with the provisions of the civil and criminal procedural laws effective in the UAE.

“All Cases that its Value is less than 50,000 AED cannot be appealed Before this court unless the value of the claim is undetermined”

Court of Cassation

Court of Cassation is the higher judicial body with power to try cases contested by the Court of Appeals. It supervises the interpretation of laws and its proper enforcement. All decisions of Court of Cassation are final and binding and are not subject to appeal.

“All Cases that its Value is less than 500,000 AED cannot be appealed Before this court unless the value of the claim is undetermined”

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Insolvency is the legal term describing the situation of a debtor who is unable to pay his, her, or its debts.


The new insolvency law, recently approved by the UAE Cabinet, gives the citizens and expatriates both to follow the organized system of payment to settle debts.

Under the new law, legal action may not be taken against debtors if they invoke their insolvency status and begin the process of restructuring their debt. However, the approved law does not decriminalize the bounced cheque.

The new law will protect debtors from legal prosecution, decriminalise the financial obligations of insolvent persons, and offer them an opportunity to work, be productive and provide for their families. The law will be implemented in January 2020.

All your questions answered: –

What is the purpose of a new law on the insolvency of natural persons? What is the legislative source of this law?

The Insolvency Law of Natural Persons addresses a debtor’s inability (if the natural person does not fit the description of a trader) to pay their debts due to bankruptcy and debt default. This is known as the ‘insolvency of the natural person’.

What is the difference between insolvency law and bankruptcy law?

The insolvency law differs from bankruptcy law, which was promulgated by Decree-Law No. 9 of 2016, particularly in the definition of the debtor. The Insolvency Law for Natural Persons applies to a natural person who is not engaged in an economic activity and is not a trader. However, the primary purpose of both laws is the same, as both exist to protect the common interests of both the creditor and the debtor in a fair and balanced manner. The risk is divided between them in such a way so as to alleviate the debtor from the cycle of financial difficulties and enable them to pay off their accumulated debt.

Does this law have any particular characteristic in terms of legislation that makes it unique from ones in other countries?

The promulgation of this federal insolvency law will underscore the UAE’s leading position. Although important, independent legislation dealing with the insolvency of a natural person through specialized independent legislation is rare.

In addition to all its economic objectives, this law has another positive aspect to it: it ensures the protection of the debtor’s dignity as a natural person, and helps create an opportunity for them to manage their finances and reduce their financial burden.

What are the expected repercussions of the Insolvency Law for Natural Persons on the financial and economic stability of the nation?

The insolvency law will bolster the economic stability of the nation and provide a secure environment for personal loans to the contentment of both the creditor and the debtor. The law provides the necessary balance to guarantee the rights of creditors and debtors, and encourages increased cash flows, in support of comprehensive and sustainable development efforts in the country.

Will the law help debtors overcome financial difficulties?

The proposed law provides two means to address the insolvency of individuals; first, through the possibility of settling financial obligations, and second through insolvency and liquidation of funds.

If the debtor is facing current or anticipated financial difficulties that prevent them from settling all their debts, the debtor can file an application with the court in order to have the opportunity to settle their financial obligations according to easy procedures that provide them with the necessary assistance, with the court appointing one or more experts to assist them during these proceedings. Once a plan to reorganize and settle financial obligations is being prepared, the settlement plan shall be voted on by the creditors in line with pre-ordained mechanism. The plan shall be implemented by the debtor directly, with the assistance and oversight of experts, and the court’s supervision.

 How do the debtors settle their obligations?

The debtor shall advance to the court and request opening the procedures for settling their financial obligations without litigating any person therein to settle their financial obligations. This is applicable if they are in insolvency in accordance with the provisions of the insolvency law.

What documents must be provided by the debtor to request a settlement of financial obligations?

The debtor shall attach the following documents when applying for the settlement of financial obligations:

    • A memorandum containing a brief description of their financial position and any data related to their sources of income, both inside or outside the country. Their professional, vocational or professional status, as the case may be, and the liquidity projections of the debtor, as well as the sources of such liquidity within a period of 12 months from the submission of the application.
    • A statement of the names and addresses of creditors, whose debts have been defaulted or are expected to be defaulted, the amount of each debt, the dates of maturity and the guarantees provided to the creditors, if any.
    • A detailed statement of the debtor’s movable and immovable assets inside and outside the country and the approximate value of each on the date of the application.
    • A statement of any legal or judicial proceedings or actions taken against the debtor.
    • A statement by the debtor that they are facing current or anticipated financial difficulties and that they are unable to, or are not expected to be able to pay their debts, at the time of application, or in the future.
    • The funds necessary to support the debtor, their family and any dependents.
    • The debtor’s proposals for the settlement of their financial obligations.
    • The debtor shall nominate an expert to undertake the proceedings in accordance with the provisions of this law.
    • A statement that discloses financial transfers outside the country that took place during the past 12 months.
    • Any other documents supporting the application, or as requested by the court.

What are the procedures for the debtor if they are unable to provide the required information?

The debtor shall state the reasons for not furnishing the required documents or information in their application. If the court considers that the documents submitted are insufficient to rule on the application, it may grant the debtor time to submit any additional data or documents.

How long does the court take to decide on the debtor’s application?

The court shall decide on the application without notice, or pleading, within a period not exceeding five working days from the date of submission of the application to it fulfilling all required conditions. The court shall, if it accepts the request, decide to open the procedure for settlement of financial obligations.

What follows from the court’s decision to open the procedures for settling financial obligations?

The decision of the court shall cease the obligation of the debtor to apply for insolvency and the liquidation of their property. Suspension of execution shall continue during the period of settlement of financial obligations unless the debtor breaches their obligations as set out in accordance with this law.

What does the court’s decision to open the settlement of financial obligations entail?

In the decision to open a settlement of financial obligations, the court shall appoint one or more experts to assist the debtor in settling their financial obligations. The expert shall not be a creditor of the debtor, or be associated with them in any interest, or kinship until the fourth degree.

When can the court decide to reject the request for settlement of financial obligations?

The court shall decide not to complete the procedures for the settlement of financial obligations and refuse a request for settlement of financial obligations in the following cases:

    • If the court determines that the debtor has committed, or refrained from, taking any action with a view to concealing or damaging any part of their property.
    • If the debtor provides false statements about their debts, rights or funds.
    • If the debtor is in a state of non-payment of any of their debts on maturity for more than 40 consecutive working days as a result of their inability to fulfil these debts.

What steps does the appointed expert undertake to prepare a financial liability settlement plan?

    • The expert shall prepare a plan in cooperation with the debtor, provide the creditors with a copy, and deposit a copy with the court within 22 working days, from the date of the court’s decision to instruct the expert to prepare the plan. The court may authorize an extension of the submission period if the need arises.
    • The expert shall invite the debtor and creditors to one or more meetings, specifying the time and place of the meeting, to discuss and vote on the plan. They shall be invited to attend the meeting by any means of communication as deemed appropriate.
    • The first meeting shall be held within a period not exceeding 10 working days from the date of providing the creditors with a copy of the plan. The debtor and creditor shall attend the meeting in person, or by someone authorized on their behalf.

What is the proposed duration of the execution of the financial liability settlement plan?

The proposed period for the execution of the plan may not exceed three years from the date of the ratification of the plan by the court.

Who is not eligible to vote on the plan?

    • The debtor’s spouse.
    • Any person financially supported by the debtor.
    • Relatives of the debtor up to the second degree.

Is it permissible to amend the plan after the financial settlement procedures?

Yes, amendments may be made; the expert shall request the court to approve the amendments, if it is deemed necessary to make amendments to the plan during its implementation. The court shall, before deciding on the application, notify all creditors who may be affected by such amendments, and who deem it necessary to notify the creditors, and the court may issue a decision to authorize the amendment in whole or in part, or to reject it.

When is the financial settlement procedure plan terminated or invalidated?

The court shall decide on the termination of the financial settlement of the debtor in the following cases:

    • If the court finds that the debtor’s financial obligations cannot be settled.
    • If it is impossible to implement the plan because the debtor ceases to pay any of their debts on due dates for more than 40 consecutive working days, as a result of their failure to meet these debts.
    • If the debtor requests the court to terminate the execution of the plan before the settlement of financial obligations with creditors.
    • If the period specified for the implementation of the plan expires without the settlement of financial obligations of the debtor.
    • If the debtor fails to follow the plan.

The court shall issue a decision to nullify the approved plan if it finds that the debtor is evading, or attempting to evade, fulfilling their obligations. This can include concealing or damaging any part of their property, providing false statements about their debts, rights, property or disposition of any of their rights or property.

What is the amount that a creditor is entitled to apply for insolvency of the debtor and liquidate their funds?

The amount is AED 200,000.

When does the court decide on the insolvency of the debtor and the liquidation of their assets?

The court shall decide on the insolvency of the debtor and the liquidation of their assets within 15 days from the date of receiving the secretary’s report.

What is the term that the court can decide to grant the debtor?

The court may, upon the recommendation of the secretary and the debtor’s request, before commencing the liquidation of the debtor’s funds, decide to grant the debtor a term under the secretary’s supervision of no more than three months. This is extendable by a similar period to reach an amicable settlement with the creditors, provided that this does not prejudice the interest of creditors.

Is it possible for any of the creditors to appeal the court’s decision to grant the debtor a time limit for an amicable settlement?

Any of the creditors may appeal the court’s decision to grant the debtor a time for amicable settlement before the Court of Appeal. The appeal shall not result in the suspension of the proceedings and the decision issued in the appeal shall be considered final.

What are the funds excluded from liquidation procedures?

    • Pension or social benefit provided to the debtor.
    • Funds required by the debtor to meet their basic needs and those of their dependents. This amount is specified by the court.

Who is prohibited from buying debtor’s assets?

The following persons may not purchase the debtor’s assets except with the consent of the court, and if it is in the interest of creditors:

    • The debtor’s spouse, or one of their relatives in the second degree.
    • Any other person who, during the preceding two years from the date of the issuance of the decision to open the insolvency proceedings and liquidate the debtor’s assets, is a partner, employee, accountant or agent of the debtor.

 When are insolvency and liquidation proceedings closed?

Following the final distribution of the debtor’s funds to creditors, the court shall issue a decision to close all liquidation procedures. This includes a list of the names of creditors whose debts are accepted, their amount and what has been fulfilled. It also instructs the secretary to publish that decision in two local daily newspapers, one in Arabic and the other in English.

What are the penal provisions in the insolvency law?

Any creditor who commits any of the following acts shall be liable to imprisonment and a fine of not less than AED 10,000 and not more than Dh100,000:

    1. If they make a claim relating to a fake or sham debt against the debtor.
    2. If they increase the debts to the debtor illegally.
    3. If they vote in any meetings on decisions relating to the settlement of financial obligations of the debtor in the knowledge that it is legally prohibited to do so.
    4. If, following the court’s decision to commence insolvency proceedings and the liquidation of funds, the debtor knowingly concludes an agreement which gives them special advantage to the detriment of other creditors.

Each insolvency debtor shall be punishable by imprisonment for a period not exceeding two years and/or a fine of not less than AED 20,000 and not exceeding AED 60,000, if the insolvency debtor is proved to cause a loss to creditors as a result of one of the following acts:

    1. Spending large sums of money in speculative business that is not required by their usual business, or in the purchase of services, goods or materials for personal or domestic use that are not commensurate with their turbulent financial situation, or they have engaged in gambling, knowing that their creditors may be adversely affected.
    2. Paying the debts of one of the creditors, and in turn causing damage to the remaining creditors within a period of six months prior to the submission of their request to settle their obligations or declare insolvency.
    3. Disposing of their funds in bad faith and at less than the market price, or resorting to harmful means, to damage creditors with the intention of delaying the declaration of insolvency and liquidating their funds.
    4. Any disbursement of money knowing that it violates the terms of the plan.

We Yasin al Hamed Advocates and Legal Consultants will help you in your jurisdiction that can help answer your insolvency and bankruptcy questions.



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